CCE IN THE NEWS

Source: Newsday

Mangano faces serious issues in second term as Nassau exec

BY ROBERT BRODSKY, SID CASSESE AND LAURA FIGUEROA

Posted: November 25, 2013
Originally Published: November 24, 2013

Nassau County Executive Edward Mangano will face serious fiscal, labor and management issues that could determine the economic future of the county for decades when he begins his second term on Jan. 1.

The county's finances remain under the control of the Nassau Interim Finance Authority, a state monitoring board that says Mangano has run a deficit every year since taking office in 2010.

And the more than 7,300 county employees have gone almost three years without raises.

Other long-running issues -- including the redevelopment of Nassau Coliseum and its surrounding 77 acres, fixing the property tax assessment system to end tens of millions of dollars per year in borrowing for settlement payments and repairing the county's sewage treatment plants -- also will be on the table in Mangano's second term.

Mangano, a Republican, on Nov. 5 won re-election over Democrat Thomas Suozzi by 18 percentage points.

Newsday spoke with more than a dozen political, labor and finance experts last week about Mangano's biggest challenges during the next four years. They said the following issues are likely to be on the front burner for Mangano.

Control of county finances

In January 2011, NIFA took control of the county's finances after determining the county faced a $176 million deficit.

NIFA reports Nassau's projected deficit for 2014 at $122 million. To end the NIFA control period, in which the board can reject budgets, contracts and freeze wages, the deficit cannot exceed 1 percent of the county's $2.79 billion budget.

Budget experts said that to meet that threshold, Mangano must increase taxes and other revenues or cut expenses.

NIFA board member Chris Wright said to end the control period Mangano must bring recurring revenues and expenditures back in line.

"I hope he takes seriously the responsibility to govern and not to drive the county into insolvency," added NIFA board member George Marlin.

Arthur "Jerry" Kremer, a former Democratic chairman of the State Assembly Ways and Means Committee, said ending the control period "would not only raise [Nassau's] bond rating but also save taxpayers a large amount of money" in interest.

NIFA agreed in October 2011 to allow Mangano to borrow $450 million, primarily for tax refunds, over four years in exchange for cutting $150 million in labor costs.

The plan was intended to bring Nassau's finances into structural balance but NIFA officials said Mangano secured only $120 million in labor savings and legislative Democrats blocked his efforts to borrow for tax refunds for more than two years. In June, lawmakers agreed to $75 million in bonding for refunds.

Mangano said in an interview last week that the control period will "presumably" last four more years until the county's finances comply with "generally accepted accounting principles" that NIFA demands. The standards prevent the county from counting borrowed money as revenue in its operating budget.

Mangano said his budget will comply with the accounting standards, "as long as everyone stays on the plan and we get the full support of the legislature."

Wage freeze

In March 2011, NIFA at Mangano's request imposed a wage freeze on the county's then 8,100-person workforce.

NIFA officials said the wage freeze is essential to bringing the county's finances under control. But labor leaders contend the freeze has damaged morale and spurred employee departures, leading to poor park maintenance and delays in delivering social services.

"This can't go on forever," said Jerry Laricchiuta, president of the Civil Service Employees Association, which represents more than 3,800 full-time county employees. "Our members are extremely frustrated."

Police Benevolent Association president James Carver said if the freeze continues much longer, many of his members will retire and Nassau "will lose an entire generation of officers."

Nassau's five labor unions have reached separate agreements with Mangano that would gradually restore back pay, along with annual wage and step increases, in exchange for health care and pension contributions for new employees. The deal would extend labor contracts set to expire at the end of 2015 for an additional two years -- beyond Mangano's second term, allowing him to avoid a potentially difficult round of contract negotiations.

But NIFA has balked at allowing Mangano to repay three years of back wages, arguing it would throw the county's finances out of balance. The unions are suing to overturn the freeze. If they succeed, Nassau could be on the hook for nearly $300 million in back wages all at once.

"This is an issue that should be settled," said Mangano, who wants to hire 150 police officers after the new labor deal is secured. "NIFA needs to be part of the solution."

Superstorm Sandy recovery

Experts say Mangano's biggest challenge will be fully repairing the Bay Park sewage treatment plant, which was flooded by nine feet of water and shut down during superstorm Sandy.

The Nassau County Legislature in July approved $262 million in borrowing to repair the plant, which serves nearly 500,000 residents. Last week, the county announced it had secured $455 million in interest-free loans from the state's Environmental Facilities Corporation for additional repairs.

The funds, which Mangano says will be reimbursed by the federal and state governments, will start flowing early next year, Mangano said.

Mangano said he also plans to "revisit" his 2012 proposal to bring in a private investor to fund the transfer of the county's sewer system to a private operator. The plan failed to gain NIFA's support, with board members saying the financing element constituted "backdoor borrowing."

Adrienne Esposito, executive director of the nonprofit Citizens Campaign for the Environment, said Nassau should privatize the sewage treatment system "so that people can get the expertise we need."

Others said the plant's problems highlight broader infrastructure needs. "We need to start investing in the 21st century for sewage, roads, public transportation and our communication system," said Lawrence Levy, executive dean of the Hofstra University National Center for Suburban Studies. "The federal and state governments are not putting the kind of money in on this that they did just a few decades ago."

The assessment system

Nassau, one of only two counties in the state with a countywide assessment system, in the past decade has added $100 million in annual debt for refunds to property owners who successfully grieve their taxes.

Mangano froze tax rolls at 2010 levels, arguing that a cyclical system would give him time to develop a more accurate system. He also encouraged homeowners to appeal their assessments as a way to allow taxpayers to quickly settle their cases before they reach the courts.

Mangano planned to reassess Nassau's 423,000 taxable properties last year but was delayed by Sandy, which damaged more than 72,000 county homes. Mangano said he will probably begin the process in 2015.

County Comptroller George Maragos said Mangano should move quickly to settle tax grievances with commercial property owners, who account for 80 percent of the county's settlement bill. "We need to evolve to pay-as-you-go for all of the refunds, rather than borrowing all the time," said Maragos.

Mangano also is considering a more dramatic policy change -- turning over residential and commercial assessments to the county's towns and cities.

Some town leaders said Mangano's plan could burden municipalities with added costs. While Mangano declined to elaborate on his plans last week, he said Nassau would include "financial incentives" for towns and cities to hire staff to administer the program.

Mangano also has filed suit to end a countywide practice of paying tax refunds on behalf of the towns and schools. The case will be decided by the state Court of Appeals.

Kevin Law, president and chief executive of the Long Island Association, the region's largest business group, said Mangano should pursue the idea of transferring the assessment task.

"Counties exist primarily to address public safety and public health issues," Law said. "Handling tax assessments is not part of their core mission."

Legislative Minority Leader Kevan Abrahams (D-Freeport) said that before Mangano can transfer control of assessments, he must reduce the number of homeowners who successfully challenge their taxes.

"We need to work together on a substantive plan that doesn't just pass the buck to the schools and other municipalities," Abrahams said.

Nassau Coliseum

Business leaders said it's crucial that the $229 million renovation of the Coliseum stays on schedule.

The legislature approved a deal between Mangano and Brooklyn developer Bruce Ratner to overhaul the aging arena and build an adjacent entertainment district. The plan -- a privately-funded project that could spur further development on the surrounding site -- is before the Town of Hempstead for approval.

The project is expected to begin in 2015, when the New York Islanders will vacate the Coliseum, but the deal allows Ratner five years to secure financing and start work.

Mangano said he is focused on securing financing, partially through a state grant, for a multistory parking structure that would free up acres of land in the existing parking lot for additional development.

Mangano said the Coliseum redevelopment will "raise the value of the property which will be helpful in getting financing" for the parking structure.

Donald Monti, chief executive of Plainview-based Renaissance Downtowns, who was named by Mangano as master developer of the Hub, is planning a bio-tech park to lure science based jobs to the area. He said the project will "show that Nassau County is open for business."

Presiding Officer Norma Gonsalves (R-East Meadow) wants the administration to develop a plan that would complement the surrounding area, including its universities.

"We need to have something like a sports medical center that would attract medical graduates, as well as more industry, especially technological companies," Gonsalves said.

Eric Alexander, executive director of Vision Long Island, a nonprofit regional planning group, said Mangano also should seek state and federal grants to improve bus service and roads in the area. "He has to think beyond opening the Coliseum," Alexander said.